How to Choose the Right Buy Now, Pay Later Solution
Buy Now Pay Later (BNPL) payment options have taken the world by storm in the last few years – with more than half of consumers under the age of 40 utilizing BNPL, along with one-third of consumers over 40. Consumers love the flexibility of the BNPL, therfore 85% of consumers who have used BNPL intend to do it again. So it is clear that BNPL, is not only here to stay, but will be a growing part of the e-commerce landscape for many years to come. BNPL will become necessary as part of a strategic payment platform for merchants looking to meet customer demand and offer a flexible payment method. But with so many BNPL options available, what is the right provider for your company?
Organizations interested in finding the ideal BNPL provider should ask five questions to find the right partner to provide a flexible payment options:
1. Will the BNPL option work with my current payment settlements systems or will it require implementing a new settlement process?
Many BNPL providers require integrating a whole new form of settlement for your transactions which tracks payments made through a specific merchant portal that is provided. This adds another settlement system to the payment flow and can add complexity to the operations. At Uplift, a one-time virtual credit card is used to process payments to merchants. This means Uplift can be utilized with your current payment gateway or processor and will never need a new settlement system or add complexity to your payment operations.
2. Will the BNPL option work for all purchase sizes, or only small ones?
Many BNPL providers only work for small purchases – often less than $400 and sometimes even smaller. This means that if customers ever make purchases larger than that amount, having that type of BNPL option is limited. However, Uplift, offers payment plans for purchases begin at $100 up to $25,000.
3. Will the BNPL option integrate seamlessly with the current e-commerce flow?
The magic of BNPL is not only at the time of checkout, but also the integrated installment payment messages upfunnel. Often merchants use installment pricing (e.g., from $X / mo) to let shoppers know about BNPL options long before checkout which encourages both higher conversion and AOV. However, many BNPL providers have a one size fits all integration with limited options to integrate their messaging in the shopping funnel. Uplift, specializes in providing unique design and fit of BNPL components to the shopping funnel – thus ensuring that the Uplift BNPL capabilities is a perfect match for the marketing needs of the merchant. Uplift does this in a way that makes it easy and quick to integrate the service into the payment flow.
4. Will the BNPL option only allow merchant financing or will it include consumer financed options?
BNPL options can be either merchant financed or consumer funded. In the merchant funded model, the merchant pays a fee to the BNPL provider to cover the cost of lending consumers the purchase amount up front. In the consumer funded model, the consumer pays for the cost of an installment plan via simple or compounded interest on the purchase price. Merchant funded BNPL options are attractive to consumers because they allow a 0% purchase. However, merchant funded options usually involve shorter duration plans (e.g., 6 weeks) and tend not to cover large purchase items. They can also result in a lower approval rate – with only a small portion of consumers actually offered a pay over time option. Consumer funding, in contrast, can enable larger purchases paid back over longer time periods – allowing consumers a much more affordable monthly payment on their purchase. Uplift models itself in the BNPL space providing both merchant and consumer funded options, working with merchants to offer the exact right mix to meet their unique business goals.
5. How does BNPL option promote customer loyalty?
Many BNPL providers have consumer marketplaces which seek to be the entry point for consumers looking to shop. When a consumer finds one of these BNPL options through their favorite merchant, they are taken away from that merchant environment into a whole new shopping experience where the merchant is secondary and the BNPL marketplace is primary. All the time and money that marketing and loyalty teams spend trying to attract and retain that consumer is lost as the consumer shifts their loyalty from merchant to the BNPL platform. Even when BNPL providers agree to not cross market consumers, the moment a consumer downloads a BNPL app onto their phone to manage their payments, e-commerce merchants have lost their loyal customer to the BNPL marketplace. Uplift’s business model is focused on supporting merchants loyalty goals, therefore, intentionally not offering a marketplace that draws consumers away from the merchant ensuring the consumer loyalty remains with the merchant brand(s).
In closing, the BNPL trend is only just starting and more and more consumers will continue looking for merchants who provide BNPL options as a prerequisite to making purchases. If your company has not already selected a BNPL provider or if your company already has a provider in place, ask if these five questions can help determine whether you should be looking for, an additional BNPL option for your consumers, or a new BNPL provider altogether. In the fast paced world of BNPL, it is never too late to reconsider the best BNPL option for your strategic business objectives.